Guangzhou's controversial university town on Xiaoguwei Island is starting to release land requisitioned from farmers, a move the city says is necessary to rein in spiralling property prices.

Fifteen parcels of land would be leased to developers, the Southern Metropolis News reported, including 11,760 square metres earmarked for residential properties.

It added that the Guangzhou Higher Education Mega Centre would become an important source of supply for residential properties.

With construction finished, the university now has a land surplus. Fifty-five per cent of the island is undeveloped and large swathes with a view of the river remain. Villagers fear it will eventually be sold to property developers.

The island is also an attractive area because it is connected to the city by a short ride on the expressway and will add a subway link.

Real estate analyst Long Bin said the campus town's long-term prospects were bright because it was one of three areas that figured prominently in Guangzhou's development plan, the others being Zhujiang New City and Nansha Island. 'Being part of the southern [development] thrust and near the sea makes the university town even more important,' Mr Long said.

The central government banned university town projects, saying that developers were grabbing land for lucrative development projects and only using education projects as a pretext. The move came at about the same time the Guangzhou Higher Education Mega Centre was built in 2003.

A pet project of Guangdong party boss Zhang Dejiang, the project received support from both the municipal and provincial governments, which allowed it to be packaged into 39 small projects to get around the ban.

This is not the first time that the Guangzhou government has tried to release island property for development. It called tenders last year for two parcels of land to build petrol stations at a base price 33 times more than what it paid to villagers.

It also tried to sell three properties in December 2003 for a supermarket, cinema, hotel and conference hall for 2.5 million yuan per mu (.066 hectares), but was stopped by senior officials.